JPMorgan Q2 profit hits $16.9bn on equities, IB boom

JPMorgan Chase reported second-quarter net income of $16.9 billion, fueled by a massive jump in corporate and investment banking revenue. Earnings per share reached $6.14 as the bank generated a return on tangible common equity of 23%. Revenue, excluding significant items, climbed 15% year-on-year.

The standout performance came from the equities business, where revenue soared 86% on the back of highly dynamic market conditions, strong client flows, and favorable trading in both cash and derivatives. Fixed income revenue grew 6%. Investment banking fees jumped 30% as a rush of large IPOs and accelerated M&A closures buoyed results. Chief Financial Officer Jeremy Barnum noted that while some deals were pulled forward, the pipeline remains robust. "It feels a little bit as if the high profile nature of the activity this quarter and just the generally robust environment is itself begetting more activity," Barnum told analysts.

Consumer banking also showed surprising strength against a backdrop of elevated inflation and gas prices. The consumer and community bank added over 500,000 new checking accounts, pushing average deposits up 3% year-on-year. Credit quality outperformed expectations, leading management to lower their full-year forecast for card net charge-offs to approximately 3.2%.

The rapid expansion in markets and lending activity weighed on the bank's capital ratios. Standardized risk-weighted assets increased by roughly $103 billion, pushing the CET1 ratio down 20 basis points to 14.1%. Despite the capital drag, the board plans to raise the quarterly dividend to $1.65 per share in the third quarter.

Managing the resulting expense growth is emerging as a key challenge. Total costs hit $27.3 billion, up 15% from a year ago, driven by front-office hiring, labor inflation, and revenue-related expenses. Barnum raised the full-year adjusted expense outlook to $107.5 billion. The bank now projects total net interest income of roughly $105.5 billion for the year.

On the management front, Chairman and CEO Jamie Dimon addressed the recent elevation of Doug and Troy to co-presidents following the departure of Marianne Lake. Regarding his own tenure, Dimon stated the moves "hasn't changed the timetable or anything."